Democratic campaign treasurer Kinde Durkee pleaded guilty Friday to cheating her clients out of at least $7 million, admitting fault in what officials are calling the largest campaign embezzlement case ever prosecuted.
The longtime bookkeeper for hundreds of political committees entered guilty pleas to five counts of mail fraud. Prosecutors are expected to seek 11 to 14 years in prison time under sentencing guidelines.
Federal prosecutors say the veteran campaign treasurer routinely misappropriated money from the accounts she managed for at least 50 clients, including Democratic Sen. Dianne Feinstein, Reps. Linda Sanchez and Loretta Sanchez, Assemblyman Jose Solorio and Board of Equalization Member Jerome Horton. While the plea agreement pegs the losses at $7 million or more, prosecutors say they expect the total to rise to $9 million or $10 million.
"I recently read a newspaper article which referred to Kinde Durkee as the Bernie Madoff of campaign treasurers, and that may be an apt characterization," U.S. Attorney Benjamin Wagner said at a press conference, comparing Durkee's crimes to a Ponzi scheme.
The plea agreement closes a criminal investigation of what was a decade-long theft of campaign funds from local, state and federal candidates, powerful Democratic political organizations and various nonprofits.
But the saga is not yet over for the victim campaign committees, some of which saw their entire savings wiped out by the woman trusted to manage their money.
Durkee, who remains free pending sentencing June 20, agreed to turn over her Burbank office and a 401(k) retirement fund worth an estimated $100,000 to $120,000 as part of the plea agreement. She is scheduled to submit a full disclosure of her finances to be used in crafting a restitution plan for repaying victims in the next five weeks.
But prosecutors don't believe Durkee's assets come anywhere close to what her clients lost. "It's essentially spent, from what we can tell," Wagner said of the embezzled funds.
Durkee spent client cash on various personal expenses, including mortgage payments for her Long Beach home and care for her elderly mother, according to court documents submitted by federal prosecutors. Other times, the money was used to pay five-figure credit card bills she racked up with charges at places like amazon.com, Baskin Robbins, Ariel's Grotto at Disneyland and Aquarium of the Pacific in Long Beach.
She also used client money for employee payroll and other business expenses at her firm, Durkee & Associates, which Wagner said was known for the low rates it offered to clients.
Wagner said there "may never be a day where we'll be able to account for the final penny" because of the sheer number of unauthorized transactions, which he said occurred on a near-daily basis for 10 years. Money was routinely transferred between accounts to make up for earlier unauthorized withdrawals, he said.
Friday's plea appearance marked Durkee's first known public appearance since her September arrest. She entered the courtroom shortly before 11 a.m. wearing loose black pants, a black jacket and black Crocs gardening clogs, her graying hair styled in a short, shaggy cut.
The 59-year-old Long Beach resident kept her comments short, responding softly to the U.S. District Judge Kimberly Mueller's questions with "Yes, your honor" and "No, your honor."
She told Mueller she had no history of psychiatric illness or treatment for drug or alcohol abuse, saying the only medications she takes are for blood pressure and cholesterol.
Durkee declined to speak to reporters. Her attorney, Daniel V. Nixon, described his client's mindset as "very remorseful." He declined comment on her motives or what she did with the money.
"She's accepting full responsibility for her actions and she has come to court today to acknowledge what she's done," he said after the hearing.
Durkee was arrested in September on suspicion of committing mail fraud by submitting falsified campaign finance reports to elections officials through the Postal Service. The investigation was sparked by irregularities uncovered during an audit by the state's Fair Political Practices Commission.
Despite a history of fines for campaign disclosure violations issued by the FPPC, Durkee maintained a client list that included some of California's most prominent Democratic politicians, political organizations and nonprofits.
Feinstein, who is running for re-election this year, believes millions are missing from her war chest. The wealthy senator, who cut a $5 million check to her campaign to cover the missing money, is one of several clients who have sued Durkee and the bank where the assets were held in hopes of recovering some of the lost money.
Some federal and state candidates have also asked elections officials to allow them to seek more money from donors whose contributions may have been lost or stolen in the hands of Durkee.
Some of Durkee's smaller clients may not have the resources to fight for what they lost.
California College Democrats President Paul Murre said his organization expects to end up with a fraction of the $3,000 that should have been in its account. Faced with limited money during an election year, leaders had to delay a promise to reward campus chapters that registered the most voters with a cash prize, a decision Murre said was "personally really hard."
"We don't necessarily have the financial infrastructure to raise back this money really quickly," said Murre, a junior at San Francisco State University. "It was really damaging to our organization."